TISA Comments on the Government’s suspension of the triple lock on pensions
Commenting on the Government’s suspension of the triple lock on pensions, Renny Biggins, Head of Retirement, TISA, said: “This decision is a direct result of extraordinary circumstances and comes as no surprise to the pensions industry. The economic impact of the pandemic could not have easily been predicted and it has highlighted several areas where policy clearly needs review.
“The pensions triple lock falls into this category, and recent events have thrown the unintended flaws in the triple lock formula into stark relief. It should not be so visibly skewed, either positively or negatively, by outsized fluctuations in one of its parameters. A one-year suspension is a reasonable, short-term solution to a disproportionate outcome. However, longer term, there is a clear need for a formula that guards against such short-term distortions while maintaining a long-term rise in the state pension in real terms, adjusting for inflation.
“For the majority of retirees, the state pension forms the largest part of total retirement income. The UK’s state pension is consistently in bottom three of the OECD in terms of state pension provision, and that is neither sustainable nor desirable in the long term. The value of the triple lock has been in guaranteeing a steady increase in the state pension in real terms, and any long-term solution should maintain that guarantee.”